Opinion
No. CV-03-0081959 S
March 13, 2006
MEMORANDUM OF DECISION
In this matter, plaintiffs seek specific performance premised on an option contract with defendant Robert M. Wood for the purchase of real estate in Somers, Connecticut. Plaintiffs also seek money damages from Robert M. Wood, Bruce E. Wood and Thomas E. Wood, under claims of breach of contract and tortious interference with contract, and compensatory and punitive damages, as well as attorneys fees, for alleged violation of the Connecticut Unfair Trade Practices Act (hereinafter CUTPA) by the defendants. The claims against a fifth defendant, Stafford Savings Bank, were withdrawn prior to the commencement of trial. The defendants have denied the substantive allegations of the plaintiffs' complaint and have raised special defenses to the plaintiffs' claims. The parties agreed to bifurcation of the proceedings and trial has been completed only as to the liability aspects of the case.
Background and Factual Findings
Robert M. Wood owned real estate in Somers, Connecticut, known as 184 Wood Road, which consisted of approximately 5 acres of land on which was located a single-family house in which Robert Wood and his family resided (hereinafter "the property").
Some time before March 11, 2001, plaintiff Edward Crowe contacted Robert Wood about Mr. Crowe's interest in procuring an option to buy the property for a real estate subdivision. On or about March 11, 2001, Mr. Crowe presented an option contract to Robert Wood, and after some modifications were made, the parties signed the agreement.
The option agreement provides:
OPTION AGREEMENT FOR PURCHASE OP REAL PROPERTY
THIS OPTION AGREEMENT ("Agreement") made and entered into this 11th day of March 2001, by and between Robert Wood, whose principal address is 184 Wood Rd., Somers, CT 06071, hereinafter referred to as "Seller," and Edward Crowe, whose principal address is 129 Wood Rd. Somers, CT 06071, hereinafter referred to as "Purchaser":
WITNESSETH:
WHEREAS, Seller is the owner of certain real property being, lying and situated jute County of Tolland, State of Connecticut, such real property having the street address of 184 Wood Rd, Somers, CT 06071 ("Promises") and such property being more particularly described on attached Schedule A; and,
WHEREAS, Purchaser desires to procure an option to purchase the Premises upon the texts and provisions as hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto and for the mutual covenants contained herein, Seller and Purchaser hereby agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, the following terms shall have the following meanings:
(a) "Execution Date" shall mean the day upon which the last party to this Agreement shall duly execute this Agreement;
(b) "Option Fee" shall mean the total sum of a down payment of one percent (1.00%) or more of the total purchase price of the premises plus all closing costs, payable as set forth below;
(c) "Option Term" shall mean that period of time commencing on the Execution Date and ending on or before Sept 30, 2001;
(d) "Option Exercise Date" shall mean that date, within the Option Term upon which the Purchaser shall send its written notice to Seller exercising its Option to Purchase;
(e) "Closing Date" shall mean the last day of the closing term or such other date during the closing term selected by Purchaser.
2. GRANT OF OPTION. For and in consideration of the Option Fee payable to Seller as set forth herein, Seller does hereby grant to Purchaser the exclusive right and Option ("Option") to purchase the premises upon the terms and conditions as set forth herein.
3. PAYMENT OF OPTION FEE. Purchaser agrees to pay the Seller a down payment consisting of: 1) approximately $2,600.00 to bring the mortgage on subject property current, and 2) to make the subsequent monthly mortgage payments for the subject property of $758.78 until the Closing Date or the end of this Option Term (Sept 30, 2001), plus all closing coats upon the Closing Date.
4. EXERCISE OF OPTION. Purchaser may exercise its exclusive right to purchase the Premises pursuant to the Option, at any time during the Option Term, by giving written notice thereof to Seller. As provided for above, the date of sending of said notice shall be the Option Exercise Date. In the event the Purchaser does not exercise its exclusive right to purchase the Premises granted by the Option during the Option Term, Seller shall be entitled to retain the Option Fee and this agreement shall become absolutely null and void and neither party hereto shall have any other liability, obligation or duty hereinunder or pursuant to his Agreement.
5. CONTRACT FOR PURCHASE SALE OF REAL PROPERTY. In the event that the Purchaser exercises its exclusive Option as provided for in the preceding paragraph, Seller agrees to sell and Purchaser agrees to buy the Premises and both parties agree to execute a conflict for such purchase and sale of the Premises in accordance with the following terms and conditions:
(a) Purchase Price. The purchase price for the Premises shall be the appraised value as stated in the appraisal done for the present mortgage on or about January of 1998 for the house and other buildings and improvements situated on approximately 5 acres of land, otherwise known as 184 Wood Rd., Somers, CT 06071; however, Purchaser shall receive a credit toward such purchase price in the amount of the Option Fee;
(b) Closing Date. The closing date shall be on Sept 30, 2001, or at any other date during the Option Term as may be selected by Purchaser;
(c) Closing Costs. Purchaser's and Seller's costs of closing the Contract shall be borne by Purchaser;
(d) Default by Purchaser; Remedies of Seller. In the event Purchaser, after exercise of the Option, fails to proceed with the closing of the purchase of the Premises pursuant to the terms and provisions as contained herein and/or under the Contract, Seller shall be entitled to retain the Option Fee as liquidated damages and shall have no other recourse against Purchaser;
(e) Default by Seller, Remedies of Purchaser. In the event Seller fails to close the sale of the Premises pursuant to the terms and provisions of this Agreement and/or under the Contract, Purchaser shall be entitled to either sue for specific performance of the real estate purchase and sale contract or terminate such Contract and sue for money damages.
6. MISCELLANEOUS.
(a) Execution by Both Parties. This Agreement shall not become effective and binding until fully executed by both Purchaser and Seller.
(b) Notice. All notices, demands and/or consents provided for in this Agreement shall be in writing and shall be delivered to the parties hereto by hand or by United States Mail with postage prepaid. Such notices shall be deemed to have been served on the date mailed, postage prepaid. All such notices and communications shall be addressed to the Seller at 184 Wood Rd., Somers, Ct 06071 and to Purchaser at 129 Wood Rd., Somers, CT 06071, or at such other address as either may specify to the other in writing.
(c) Fee Governing law. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut.
(d) Successors and Assigns. This Agreement shall apply to, inure to the benefit of and be binding upon and enforceable against the parties hereto and their respective heirs, successors, and or assigns, to the extent as if specified at length throughout this Agreement.
(e) Time. Time is of the essence of this Agreement.
(f) Headings. The headings inserted at the beginning of each paragraph and/or subparagraph are for convenience of reference only and shall not limit or otherwise affect or be used in the construction of any terms or provisions hereof.
(g) Cost of this Agreement. Any cost and/or fees incurred by the Purchaser or Seller in executing this Agreement shall be borne by the respective party incurring such cost and/or fee.
(h) Entire Agreement. This Agreement contains all of the terms, promises, covenants, conditions and representations made or entered into by or between Seller and Purchaser and supersedes all prior discussions and agreements whether written or oral between Seller and Purchaser with respect to the Option and all other matters contained herein and constitutes the sole and entire Agreement between Seller and Purchaser with respect thereto. This Agreement may not be modified or amended unless such amendment is set forth in writing and executed by both Seller and Purchaser with the formalities hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under proper authority.
In pertinent part, the agreement gave the exclusive right to purchase the property to Edward Crowe, the exercise of which was available until September 30, 2001. In consideration, Mr. Crowe was obliged to make a down payment of $2,600 to bring the mortgage on the property current and he was to pay the monthly mortgage payments of $758.78 until the time of the closing on the property. In order to exercise the option, Mr. Crowe was to give written notice to Mr. Wood delivered in hand or by pre-paid mail to the property address. In addition, the option agreement required that at, the time of the exercise of the option, the parties were to execute a contract for the sale and purchase of the property. The purchase price set forth in the option agreement was the prior mortgage appraisal value ($160,000), with Mr. Crowe to receive credit thereon, at the time of the purchase, for the "option fee." The "option fee" was defined in the contract as the down payment of one percent or more of the purchase price and closing costs. The agreement further defined the option fee in its component parts: (1) a down payment of $2,600 and (2) monthly mortgage payments in the amount of $758.78 until the closing date or the end of the option term, plus closing costs. The closing date specified in the agreement was September 30, 2001, or any other date before that selected by Mr. Crowe. The agreement further provided that, in the event the option was not exercised by Mr. Crowe, Mr. Wood would be entitled to retain the down payment and the agreement would become null and void, with neither party having any other liability, obligation or duty pursuant to the agreement The agreement also provided that time was of the essence.
As of September 22, 2001, Mr. Crowe had not exercised his option under this contract, and, on that date, Messrs. Crowe and Wood signed an extension of the option agreement to end on April 30, 2002, with all of the terms to remain the same.
In October 2001, Mr. Wood notified the town tax collector that his property was under a purchase option, contingent on subdivision approval by the town. In November of 2001, Mr. Wood authorized his mortgage company, Ameriquest, to provide information as to the mortgage to Mr. Crowe. At some point in time, Mr. Crowe assigned his interest in this option contract to the JOIF partnership.
Mr. Crowe filed a subdivision application with the town for the property, as well as for a piece of property owned by William Wood (Robert's brother) at 164 Wood Road, and this was approved on March 14, 2002. The evidence reveals a letter to Mr. Wood, dated April 26, 2002, in which Mr. Crowe, on behalf of JOIF Limited Partnership, indicated that he was exercising the "May 2, 2001" (sic) Option Agreement, and he set the closing date for the purchase to be April 30, 2002. No purchase and sale agreement was referred to in the document, however, the letter did make reference to a "deed" which Mr. Crowe asked Mr. Wood to sign. Mr. Wood did not recall receiving the deed, and the one allegedly appended to the letter was not available at trial. Another deed, unsigned and undated, except for the typing in of November 2002, reflects the intent of Mr. Crowe/JOIF to require Mr. Wood to not only transfer ownership in the property, but to also hold JOIF harmless for any costs arising from clean-up for any potential pollution, contamination in environmental damage. This was certainly not a condition of the option agreement.
Nothing further transpired, and, an May 31, 2002, the parties signed another "extension" of the option agreement, taking it through August 31, 2002. On that latter date, yet another "extension" was signed, for an additional two months, taking it through October 31, 2002.
Shortly before September 30, 2002, Mr. Wood was sentenced by a state criminal court to serve approximately four months in jail for a driving-under-the-influence offense, and Mr. Wood was incarcerated from September 30, 2002 through January 27, 2003. Mr. Crowe learned of that incarceration. In a letter dated October 23, 2002, directed to Mr. Wood at the address at 184 Wood Road, Mr. Crowe indicated that he had made an agreement with a builder to purchase the property and Mr. Crowe further indicated that he and his attorney needed to be put on the prisoner visiting list so that the "the papers required" could be executed. Mr. Crowe testified that the only "document" prepared and anticipated to be executed was the warranty deed which added the term that Mr. Wood was to hold him harmless for any costs associated with the discovery and clean-up of potential pollution or other contaminants, a provision decidedly absent from the option agreement.
It is interesting to note that, as of the date of the October 23, 2002 letter, the Wood mortgage had not been paid since August 15, 2002, and that the next, and last, mortgage payment was on October 31, 2002.
There was no proof that the October 23, 2002, letter was mailed and no proof that it was given in hand. Furthermore, it is unclear whether or when Mr. Wood received that letter. He testified that his wife and brother were on his visiting list; that his wife could not bring him his mail; and that he did not recall having a conversation with her about this letter.
Mr. Wood did try to add Mr. Crowe's name to the list of people authorized to visit him at prison, but was unable to do so. At the Bergin Correctional Centre, it was possible for a prisoner to arrange for visitors, however, the entries on the prisoner's visitor's list are given when the prisoner comes to the institution, background check is done, and then the individual is put on the list is approved. Once that list is completed, no change could be made for one hundred and twenty days. This would not apply to individuals such as a prisoner's lawyer or probation officer.
Up through this time, the Ameriquest monthly mortgage was being paid by Mr. Crowe, albeit sometimes quite late, as is set forth above. After October 31, 2002, however, Mr. Crowe ceased making payments and none were made for November and December of 2002, or for January, February, or March of 2003. Mr. Crowe was aware of the nonpayment but did not advise Mr. Wood. On February 19, 2003, Mr. Crowe and Mr. Wood both signed another purported "extension" of the option agreement, allegedly effective through mid-March 2003. Ameriquest advised Mr. Crowe on February 28, 2003, that it was planning to foreclose on the property. Under letter dated March 1, 2003, addressed to both Mr. and Mrs. Wood, Mr. Crowe advised of the impending Ameriquest foreclosure and indicated that he believed he could delay the process and stop the foreclosure. He offered to pay off the mortgage debt of approximately $96,000, "put money in your pockets" and provide potential new housing, if they would meet with him promptly and sign "the documents" needed to accomplish the solutions listed above. What comprised "the documents" is unknown, but Mr. Crowe did testify that he had never prepared a purchase and sale agreement and admitted that he wanted Mr. Wood to sign a deed. Mr. Wood did not respond to that letter, understanding that he was to receive additional communication from Mr. Crowe. At about the same time, Robert Wood advised his nephew, Thomas Wood, of the foreclosure and Thomas brought the foreclosure papers to his lawyer's office to see what could be done. At that time, Robert made no mention to Thomas of the prior dealings with Mr. Crowe. Soon thereafter, Robert and Thomas discussed Thomas's potential purchase of the property and on March 3, 2003, Thomas and Robert entered into a purchase agreement, with Thomas agreeing to buy the property for $160,000. Robert gave Thomas a stack of papers, including documents reflecting Mr. Crowe's prior interest in the property, and Thomas took those papers to his lawyer, Attorney Parks. Robert told Thomas that Mr. Crowe had made mortgage payments on his behalf, but did not say why.
Prior to his testimony at trial, Thomas had not seen the option agreement. Prior to the April 7, 2003, closing on the property, Thomas learned from his attorney that an option agreement had expired, and Thomas and Robert signed an escrow agreement prepared by Attorney Parks, acknowledging that ". . . Edward Crowe had made a claim for $25,912.00 against Seller [Robert Wood] in connection with an expired option agreement between Edward Crowe and Robert Wood." The escrow agreement also recited that Edward Crowe had breached the option agreement by ceasing to make payments due, and indicated that the escrow was for the purpose of not involving the property or Thomas Wood in any dispute that might arise between Edward Crowe and Robert Wood. The escrow amount was to be held by Attorney John H. Parks, and, in a later escrow agreement executed on September 25, 2003, that escrow amount was transferred to an escrow account held by Attorney John M. Wyzik, counsel for Robert Wood in the instant matter.
After Thomas purchased the property, he permitted his uncle Robert to remain there for about six months, and when Robert moved out at the end of the summer of 2003, Thomas began significant renovations of the land and the house, planning to make it his home. The renovations, mostly done by Thomas, were not sufficiently complete to permit Thomas to move in until the summer of 2005. Thomas estimated that the present value of the property, after his work and investments, is in the range of $500,000.
Additional history and further background is as follows. Robert Wood has a limited education (tenth grade); has not engaged in any real estate dealings involving option contracts other than the one at issue here; and did not prepare the option agreement. During the period of time at issue, Mr. Wood apparently had a significant problem with the consumption of alcohol, serving time in late 2002 through early 2003 for a DUI charge, and again after this lawsuit was filed and during the course of the trial, for another DUI offense. Edward Crowe is a graduate of the University of Connecticut with a degree in business administration; has an extensive employment history in business; and has participated in real estate development, ownership and subdivision of real property. Mr. Crowe's son, Gregory, an "independent entrepreneur" assisted Mr. Crowe in drafting the option agreement at issue in this matter. Mr. Crowe is the general partner of JOIF, and the limited partners or "trustees," to use Mr. Crowe's terminology, are family members. As previously mentioned, Thomas Wood is the nephew of Robert Wood and the son of Bruce Wood. Bruce Wood is the brother of Robert and William Wood, and the executor of William Wood's estate, William having passed away on February 3, 2003. Bruce Wood co-signed for his son on property across the street from the subject property to assist his son in establishing credit and they also did a subdivision of that land, having attended meetings at the town for purposes of the subdivision. Bruce Wood was aware that Mr. Crowe was also attempting to get subdivision approval on William and Robert's property in 2001 and 2002.
Discussion
While the law recognizes the viability and enforceability of option contracts, it also recognizes that they are unique entities, and not all-encompassing. An option contract ". . . is not a contract by which one agrees to sell and the other to buy, but it is only an offer by one to sell within a limited time and a right acquired by the other to accept or reject such offer within such time." Cutter Development Corporation v. Peluso, 212 Conn. 107, 110 (1989), citing 77 Am.Jur.2d, Vendor and Purchaser 28. In comparison, a contract to purchase and sell binds both seller and buyer to the obligation of selling and purchasing. Id., 212 Conn. at 110. The option agreement at issue in this matter clearly recognized this distinction, requiring not only notice by the buyer of the exercise of the option, but also the execution of a purchase and sale agreement. Moreover, the agreement placed no obligation on Mr. Crowe to pay Mr. Wood's property, but instead gave him the exclusive right to do so, within a certain time frame, so long as that was accomplished in accordance with the other terms of the option agreement.
As the courts of this state have made clear, the principles that govern the interpretation of an option contract are well settled. In order for an effective exercise of the option to take place, there must be an unequivocal and unconditional exercise, "and in exact accord with the terms of the option." Smith v. Hevro Realty Corporation, 199 Conn. 330, 339 (1986), quoting 1A Corbin, Contracts (1963), 264, p. 523. Furthermore, if there is any ambiguity in an option contract, the document is generally strictly construed against the individual who has the option. Id., 199 Conn. at 339; Pigeon v. Hatheway, 156 Conn. 175, 183 (1968).
Rules as to option contracts are different from those relating to standard contract offer-and-acceptance principles, requiring a stringent review of compliance not only with the specific terms of the agreement, but also as to such concepts as acceptance, which, unless the option contract provides to the contrary, is not effective until it is actually received by the offeror. Smith, supra, 199 Conn. at 337.
As to the first alleged exercise of the option in April 2002, the parties never executed a purchase and sale agreement. Indeed, the only testimony at trial as to such a document was Mr. Crowe's admission that he never prepared one during the entire time that is the subject of this lawsuit. Furthermore, no closing date was set. Moreover, clearly even Mr. Crowe recognized that he had not effectively exercised the option in April of 2002 because he presented to Mr. Wood an extension of the option agreement, taking the parties through August and then another extension, taking the parties through the end of October 2002.
As to the October 23, 2002 letter, there are several issues that make it fall far short of an exercise of the option agreement. In the first place, while it can be read to insinuate that Mr. Crowe was ready to exercise the option, it did not say so in clear and unequivocal language. Especially, in light of the past history of Mr. Crowe's failure to complete the transaction, any attempt to exercise the option should have been clearer. Second, there was no proof at trial that the October 2002, letter was mailed postage prepaid, as the option agreement required, and it certainly was not delivered in hand to Mr. Wood. Third, there was no purchase agreement executed. Fourth, Mr. Crowe simply stopped making the mortgage payments, letting the property fall into a foreclosure situation, without even advising Mr. Wood or his family until the lending institution was about to foreclose, or had already commenced foreclosure proceedings. The agreement required the continued payment of the mortgage through the closing date or the end of the option term.
The attempted "extension" in February 2003, did not create any legal rights. In the first place, there was nothing existing to extend. Secondly, there was absolutely no consideration for this. (Compare the "extension" signed in the spring of 2002, in which the mortgage payments continued to be paid).
There was no breach of contract committed by Robert Wood. Indeed, the option agreement which plaintiffs seek to enforce was never exercised by the plaintiffs, and, consequently, Robert Wood prevails on each of the counts set forth in the plaintiffs' complaint. In light of the fact that there was no contract existing at any time of the involvement of Thomas Wood in the purchase of his uncle's property, there is no viable claim against him for tortious interference with contract. Furthermore, even if a viable agreement continued to exist, the court does not find that the evidence supports a claim of tortious interference with contract against this defendant. In addition, there is no evidence that Bruce Wood in any way interfered with the dealings between Mr. Crowe/JOIF and Robert Wood. Finally, in light of the above findings, plaintiffs' CUTPA claims must fail, although it should also be noted that the evidence does not establish that CUTPA applies to these individuals.
The court recognizes that considerable monies have been expended by one or both of the plaintiffs in the payment of the mortgage of Mr. Wood, however, the option agreement is quite clear in its provisions, indicating that, in the event the option were not exercised, Mr. Wood could retain the "option fee."
The Amended Complaint also asserts that the defendants used an allegedly registered trade mark without permission, namely "Whispering Woods." However, the evidence presented does not support this allegation.
For all of the above reasons, the court finds in favor of the defendants as to all of the counts of plaintiffs' complaint.